December 2010 Dividend Stock Report

Although the month ended somewhat flat, this was an overall good period for the stock market. In fact, this was the best December since 1991 for the S&P 500! Tech stocks were slightly off while energy and financial investments were strong. Commodity prices, including crude oil and gold, continue to rise. Interest rates continue to drop with the 10-year US Treasury bonds showing a 14% decrease for the year. For the second full year, the stock market showed a net increase from the beginning of January through the end of December. Hopefully, a good December will mean a more consistent 2011 without the extreme ups and downs of the past year.

The Big Three are Up

All three of the major stock market indexes are up for December. The Dow Jones Industrial Average finished at 11,577, up from November’s 11,006 figure. The Standard and Poor’s 500 Index increased to 1,257 points compared to the 1,180 point ending number for November. The Nasdaq Composite Index was up for the month at 2,652 points compared to November’s 2,498 closing point. For the year, the Dow was up by 11%, the S&P was up by 12.8%, and the Nasdaq was up 16.9%. Combine this with the increases for 2009, 18.8%, 23.5%, and 43.4% respectively, and you can quickly see that it hasn’t been a terrible time to invest in the stock market even though the economy has seen quite a few up and downs over the same timeframe.

Strong Holiday Sales Indicate Increased Consumer Confidence

If the holiday sales are an indication of increased consumer confidence, the economy might be headed for an upswing despite naysayers who continue to predict another upcoming dip in the economy. With the pent-up demand that has built up over the past years as consumers have added to their savings accounts instead of their possessions, sales of consumer goods are expected to continue. As unemployment numbers continue to slowly drop and the new Congressional members begin to settle in on Capital Hill, everyone is hoping that the boost to the economy seen in December continues.

The Foreign Situation and the Strength of the Dollar

Some of our uncertainty with our domestic stock market this year was due to the volatile European markets. As the year wound down, so did our worries about the crisis across the pond. Although the Irish and Greek economies are still very weak, it seems to be the status-quo instead of a panic-inducing emergency. Other European countries, like Germany, and most of the Asian economies continue to show strong growth. Although the dollar is predicted to be slightly weaker compared to foreign currency, this development can actually work in our favor. It can boost our domestic economy by strengthening our export numbers. The weaker dollar is another reason that commodity trading has been so popular over the course of 2010.

December’s Dividend Paying Stocks

For the month, the average dividend paying stock did quite well, just like the rest of the stock market. For the year, the leading stocks in this category, referred to as the Standards and Poor’s 500 Dividend Aristocrats, are up 19.35% in total returns and 15.7% in price returns. For the month, they are up 5.49% and 5.2%, respectively. Looking at the past five years, the total returns are up 5.22% and the price returns are up 2.14%. The current top performing Dividend Aristocrats are:

• Stanley Black & Decker from the Consumer Discretionary sector trading at $66.87
• Walgreens from the Consumer Staples sector trading at $38.96
• Target Corp from the Consumer Discretionary sector trading at $60.13
• PPG Industries from the Materials sector trading at $84.07
• CenturyLink Inc from the Telecommunication Services sector trading at $46.17
• Sherwin-Williams Co Inc from the Materials sector trading at $83.75
• Dover Corp from the Industrials sector trading at $58.45
• Air Products and Chemicals Inc from the Materials sector trading at $90.95
• AFLAC Inc from the Financials sector trading at $56.43
• Grainger, W.W. Inc from the Industrials sector trading at $138.11

All Industrial Sectors are Up for December!

After the less than stellar results offered to investors in November, it’s great to see some real improvement for December. Even the lowest performer, the Utilities sector, was up by 2.75% for the month. The clear leader was the Financial sector with a 10.62% increase. All sectors are also up for the year. Over this 12-month period, the Health Care sector was the weakest with a .71% gain while the Consumer Discretionary sector showed the highest level of growth with a 25.72% increase. The following list details December, 2010 price return changes compared to November, 2010 by industry along with the end-of-year figures:

• Energy sector, up by 8.93% for December, up by 17.86% year-to-date
• Materials sector, up by 10.16% for December, up by 19.92% year-to-date
• Industrial sector, up by 7.56% for December, up by 23.92% year-to-date
• Consumer Discretionary Spending sector up by 4.00% for December, up by 25.72% year-to-date
• Consumer Staples sector, up by 3.83% for December, up by 10.67% year-to-date
• Health Care sector, up by 4.34% for December, up by 0.71% year-to-date
• Financials sector, up by 10.63% for December, up by 10.83% year-to-date
• Information Technology sector, up by 5.23% for December, up by 9.13% year-to-date
• Telecommunication sector, up by 7.59% for December, up by 12.30% year-to-date
• Utilities sector, up by 2.75% for December, up by 0.86% year-to-date